In the Union Budget for 2026–27, Finance Minister Nirmala Sitharaman has proposed the establishment of dedicated rare earth corridors in the mineral-rich states of Odisha, Andhra Pradesh, Tamil Nadu, and Kerala.

The initiative aims to reduce India's reliance on imports and strengthen domestic capabilities in critical minerals, particularly rare earth elements, which are vital for clean energy, electronics, defense, and electric mobility. Sitharaman highlighted that the government will support these states in promoting mining, processing, research, and manufacturing of rare earth elements. "The budget proposes raising the Electronics Components Manufacturing Scheme outlay from Rs 22,999 crore to Rs 40,000 crore, alongside new initiatives such as ISM 2.0 and rare earth corridors," she stated.

The corridors will help build domestic capacity and shield Indian industries from global supply shocks. Tamil Nadu and Kerala, which have significant coastal reserves, including monazite-rich sands, will play a central role in India’s critical minerals strategy. This move is expected to bring significant investment, create employment, and boost industrial activity in these states.